Asian stocks rise for first month since last October

SILVER LINING:More than half of the firms on the MSCI Asia Pacific Index beat profit forecasts to push regional markets up, despite a drop in China’s stocks and its currency

Bloomberg and AFP

Asian stocks posted a third week of gains, completing the first monthly advance since October last year, as company profit forecasts and takeover speculation overshadowed concern that the Chinese economy will slow down.

Ramsay Health Care Ltd surged 8.8 percent this week in Sydney after raising its profit forecast, while Naver Corp soared 16 percent in Seoul as people familiar with the matter said Japan’s SoftBank Corp is seeking a stake in Naver’s Line Corp mobile messaging service.

The MSCI Asia Pacific Index gained 0.3 percent this week to finish on 137.84. It climbed 5.9 percent last month from this year’s low on Feb. 4, leaving the gauge trading at 13 times the estimated earnings of its constituent companies, compared with 15.7 for the Standard & Poor’s 500 Index and 14.4 for the STOXX Europe 600 Index, according to data compiled by Bloomberg.

Of the 420 companies on the Asia-Pacific measure that have reported quarterly earnings since the start of the year and for which Bloomberg compiles estimates, 53 percent topped profit forecasts.

In Taipei, markets were closed on Friday for 228 Memorial Day.

On Thursday, foreign institutional investors served as net buyers of NT$6.94 billion (US$229 million) worth of local shares on the TAIEX, which closed up 0.45 percent at 8,639.58 points, compared with 8,600.86 the day before and 8,524.62 on Feb. 20.

Bucking the upward trend was China’s Shanghai Composite Index. The index lost 2.7 percent this week to post its biggest weekly decline since the period ending on Jan. 10 amid concern that growth will wane as banks curb lending to the real-estate market, while a weaker yuan spurs capital outflows.

Chinese shares were dragged lower ahead of the National People’s Congress meetings and a report due yesterday that was expected to show that a manufacturing gauge declined to a 17-month low.

“You’re going to see China growing much more slowly than people think,” Epoch Holding Corp chief executive officer Bill Priest said in Sydney.

The yuan plunged as much as 0.85 percent to a 10-month low of 6.1808 per US dollar on Friday in Shanghai in the biggest intraday loss in China Foreign Exchange Trade System prices since 2007. The drop was the biggest since the country unified official and market exchange rates at the start of 1994, according to data compiled by Bloomberg.

Goldman Sachs Group Inc said that a combination of macroeconomic and currency reform objectives are behind the yuan’s sudden weakening, according to a report published on Thursday by analysts, including Kamakshya Trivedi.

There are growing concerns about the growth impact of a credit buildup over the past few years, the report said. Beijing policymakers also want to discourage leveraged bets on yuan appreciation, especially by local companies, it added.